Financial stability is essential in any economic sphere. With rent, bills, grocery shopping and other costs accumulating day after day, it is often difficult to find a balance. In this case, a plan must be put in place and strictly followed. Creating such a program can be tricky if you don't know the basic steps to take to establish a new budget. Here are some tips that will help you find financial strength within six months.
Steps
Step 1. Write down all current expenses
Grab a notebook and write down all your expenses: checks, costs of using your credit card and expenses you make by paying in cash. Categorize these items and divide them into different groups, including food, rent / mortgage, utility bills, leisure, travel, insurance, medical bills, and clothing. If you have children who go to daycare or have a babysitter, you will need to enter this category as well. Finally, add a group of miscellaneous expenses, which do not fall under the other items because they are occasional outings.
Step 2. Analyze all income, including regular salaries, any interest earned, and potential annuities
Step 3. Determine your progress (or lack thereof) by comparing your income to your expenses
If what you earn is considerably less than what you spend, you need to make changes immediately.
Step 4. Create a budget based on regular expenses
Look for any outings that you can correct and reduce, such as dining out, leisure costs, or total bills (sometimes just adjusting the thermostat). Better to bring your own lunch instead of eating out every day. Make coffee instead of buying it at the coffee shop before going to work. Buy soft drinks at the grocery store, not at the vending machines.
Step 5. Stop using credit cards, especially those with high interest rates
Paying everything with your credit card, even the lower costs, means spending more money, because then you will have to pay the interest that they will charge you.
Step 6. Pay all bills
Those that have high interest rates or are running out of pay should be at the top of the priority list. In general, it is ideal to settle the bills in order of size, from the lowest to the highest. Establish a monthly payment plan to close all major ones.
Step 7. If you have extra money, use it to pay what you owe, otherwise save it in a savings account
Don't spend it. Use them to help you become more financially stable.
Step 8. If you can, find an extra job or create another revenue stream
You should give it a try if your budget still doesn't suit you. Sometimes it is enough to work for some time even in another place in order to settle all the outstanding bills: the sacrifice is worth it.
Step 9. Learn to appreciate free or cheaper activities
For example, instead of going to the movies, rent a movie or watch television. Go to your city park instead of choosing themed or fun ones.
Step 10. Create an emergency fund, which should be three to six months of your current income
You can use it for unexpected expenses around the house, to repair your car, or as a backup if you run out of work.
